Hardware, Smart Contracts in Illinois and Tracking Mongolian Cashmere

Off the Blocks | Vol 98, January 14, 2020

At Proteum, we partner with entrepreneurs to develop and deploy innovative products and solutions built around blockchain technology - advising them on building sustainable companies in a rapidly changing investment, regulatory and tech landscape. We are industry and sector agnostic.


The State of Crypto

Last week, Laura Shin, crypto journalist and host of the Unchained Podcast, featured Alex Pack, and Haseeb Qureshi from Dragonfly Capital in a wide-ranging and fantastic conversation on the state of the crypto universe.

They talk about why Dragonfly has a global focus, how they choose investments, and why they try to be as agnostic as possible about asset type.

This is a fairly comprehensive commentary as they discuss:

  1. Why most protocols, including Bitcoin, still look like venture bets, why, at the moment, Bitcoin looks like a better investment than anything built on top of Bitcoin, and why Lightning hasn't yet taken off and why they think it won't.

  1. Why Ethereum is so far in the lead and whether anything will become an Ethereum killer.

  2. How Libra affects their investments in stablecoins,

  3. Why Xi Jinping's "blockchain, not crypto" emphasis is a dead end,

  4. Whether blockchain-based identity is an investable area?

You can listen to the podcast here:

I have a bit of a different understanding on the enterprise adoption of blockchain technology. Enterprises have gone forth with private blockchains not because they feel less disruptive. They know that the transactional business models being built atop private blockchains are inherently disruptive to their SaaS-based business as usual. The reason that many of the projects have reached a dead-end is that ironically, there is limited incentive to leave the confines of a safe innovation lab and create an ecosystem that can actually solve real-world problems. Most enterprises still have a myopic view of data ownership and control and within the confines of a walled data garden. It is all but impossible to foster the kind of partnerships that a blockchain ecosystem requires to build on a common understanding of data sharing with applications that can integrate seamlessly.

Take supply chains for example - how does one share multi-party data and preserve contractual confidentiality requirements (such as preferential discounts) on a completely public and transparent blockchain? Supply chains run on trade finance - how does an enterprise get access to credit on a blockchain - there are many unresolved questions in this area including identity management (both corporate and individual), credit provider, asset tracking, asset custody, payments, settlements, accounting, hedging volatility, complying with anti-money laundering laws and other regulatory aspects. To make things more complicated, the UI/UX issues are alien territory for most of the enterprise workforce in field operations. These are some of the questions that pop up constantly and are good reasons that enterprise projects have ended up on a bridge to nowhere. None of these issues have been sorted out in the crypto world either, although quite rightly, a number of startups are laser-focused on solving come of these. and To chart a way forward, we have to look at the developer community and entrepreneurs for ideas that can be integrated with enterprise applications, perhaps piecemeal, solving one small pain at a time, and not the other way around.


Now some significant news from the world this week:

  1. Hardware | Two Blockchain Devices Win Plaudits at CES 2020: In tech there's an old adage: "hardware is hard." It's much easier to prototype and test a product when a mistake can be fixed by deleting and rewriting a few lines of code. At the Consumer Electronics Show (CES) in Las Vegas this week, though, two crypto companies are leading with atoms rather than bits, and it seems to be working. The MakerDAO Foundation was showing off its integration with the XPOS point-of-sale system, a device that Pundi X made to both sell crypto and also for merchants to accept crypto as payment. XPOS isn't what earned Pundi X plaudits at CES, though. Instead, it was "Blok On Blok" (BOB), its blockchain phone, which got recognized in the trade show’s Mobile Devices & Accessories category. Similarly, “Internet of Trusted Things” startup IoTeX was showing off its Ucam device, a home security camera that shares footage to the cloud, but it isn't actually branded as IoTeX. [… Read More on Coindesk]

    Our company is a blockchain platform, and we are working with other IoT and hardware manufacturing companies to make private and secure IoT devices.

    - Dorothy Ko, IoTeX

  2. Fintech | Ant Financial Aims to Launch its Enterprise Blockchain Platform: Ant Financial, the financial affiliate of Chinese e-commerce giant Alibaba, is reportedly launching its enterprise-focused “Ant Blockchain Open Alliance” platform this month. The network has been live in beta as of Nov. 2019, and will imminently be launched as a fully operational chain. [… Read More on CoinTelegraph]

    In the past two years, Ant Financial has been working on two aspects about blockchain. One is to improve the technology, and the other is to open it up and accelerate the commercialization of blockchain applications.

    - Jiang Guofei, VP, Ant Financial Group

  3. Regulatory | Illinois Legalizes Blockchain Contracts: With the new year Illinois became the latest state to recognize smart contracts and other blockchain-based records as legal instruments. The state’s “Blockchain Technology Act,” sponsored by Rep. Keith Wheeler (R), took effect Jan. 1, opening a slew of potential new legal scenarios for blockchain-based contracts. These contracts are now admissible as evidence in court, recognized as a viable alternative to paper-based records and statutorily exempt from local taxation. The Illinois law extends the same legal recognition already enjoyed by paper contracts to blockchain contracts and agreements so that they are recognized as legally binding in the eyes of the state. It also shields the blockchain industry from local government interference, meaning cities and towns cannot impose taxes and regulations or require licensing or permits on blockchain systems or those who use them. [… Read More on Coindesk]

  4. Telecom | Telecom Giant Telefonica Pilots Blockchain Access on 8000 Spanish Firms: Spanish telecommunications giant Telefonica has reportedly partnered with the local Association of Science and Technology Parks (APTE) to grant access to its blockchain to about 8,000 firms in Spain. Telefonica will deploy nodes of its Hyperledger-based blockchain at APTE’s 52 sites. During the three-month-long testing period, firms will be encouraged to develop applications on the network and allowed to experiment with their own tokens. Telefonica partnered with IT giant IBM in November 2018 to apply blockchain technology to managing international mobile phone call traffic. [… Read More on CoinTelegraph]

  5. Payments | Samsung SDS, Syniverse Collaborate for Blockchain Mobile Payments: Samsung SDS and telecommunications service provider Syniverse announced a partnership to develop a blockchain-based mobile payments platform. The blockchain platform aims to enable seamless transactions between mobile operators and enterprises in the logistics, financial, travel and hospitality, media and entertainment, and retail markets. Major private equity firm Carlyle Group owns Syniverse, which says it processes $35 billion in mobile transactions a year and connects to 7 billion devices. Under the agreement, Samsung SDS’ blockchain-based Nexledger Universal platform will work in tandem with Syniverse’s blockchain solution Universal Commerce for clearing and settlement as well as its Mobile Engagement (messaging) platform. The goal is to develop a common platform which will work for any mobile operator, and any user can send money, loyalty points or digital currencies to other users or merchants globally. [… Read More on Ledger Insights]

The Final Word | Blockchain Powered App Helps Mongolian Herders Trace Cashmere

Blockchain-Powered App Helps Mongolian Herders Trace Cashmere
Image Source

Toronto-based startup Convergence.tech has successfully concluded a blockchain-based pilot to help Mongolian nomadic herders track and certify sustainable cashmere. The supply chain project, which was conducted with the United Nations Development Program (UNDP), is powered by Convergence.tech’s Ethereum-based traceability platform, Backbone. Convergence chose to focus on cashmere herders for its pilot, as many of these individuals face harsh working conditions and income instability. Moreover, the fashion supply chain lacks transparency, making it difficult for consumers to understand where cashmere products originate. [… Read More on CoinTelegraph]

“The nomadic community is one of immense pride but one with a volatile and unstable income. Leveraging blockchain technology within the transformation of the cashmere industry can provide numerous benefits for Mongolian herders, buyers, and sellers alike.”

- Chami Akmeemana, CEO, Convergence.tech


About Proteum
Proteum is a global blockchain investment and advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their ecosystem and unique capabilities so that they can own and control their future. ProteumX, our accelerator program, invests in and accelerates the time to market for startups and emerging ideas based on blockchain solutions.

www.proteum.io | info@proteum.io  | Twitter: @proteumio | ProteumX

Edge Computing + Blockchain and TON

Off the Blocks | Vol 97, January 7, 2020

At Proteum, we partner with entrepreneurs to develop and deploy innovative products and solutions built with blockchain technology - advising them on building sustainable companies in a rapidly changing investment, regulatory and tech landscape.


On the Edge of New Beginnings

Decentralization has been a recurring theme over the last few years. Certainly, it has been the buzzword that has held the blockchain ecosystem together (philosophically). However, in my conversations with senior executives at enterprises or enterprise-grade startups, it has been apparent that they have missed the memo on the subject.

Take for example the intensifying “cloud wars” - while the top players are jostling for increased market share, the real disruption is happening over the edge and these centralized clouds are absolutely unprepared for the proliferation of trillions of devices on the edge - aggregating data, processing it, interacting with other connected devices and making critical decisions in real-time. For example, automated driving - for a vehicle driving autonomously at 65mph on a highway, there is simply no time for data to flow all the way back to a centralized architecture, be disaggregated and flow back to the vehicle with instruction on its next move.

A self-driving car is a decentralized data center by itself - aggregating data, interacting with its sensor ecosystem and making decisions in real-time.

While not every application on the edge needs to be a data center, edge devices are surely ushering in the model of decentralized computing. The cloud will have a role to play - more as an aggregator and for slow-moving changes that percolate throughout the system - for example, machine learning. Agility will reside on the edge. This will have big implications on how data is collected, stored, networked and transmitted from the edge to other edge devices and to the cloud.

Edge devices are becoming increasingly more sophisticated and the Internet of Things (IoT) is perhaps closer to reality than ever before. Just like dumb UNIX terminals were replaced by increasingly more powerful PCs, point sensors will pave the way for ever more powerful and feature-laden IoT devices providing real-time complex computation and actions.

Related image
Image Source

Given the amount of data generated at edges, and the push from existing cloud vendors to store as much of it as possible, the idea of sending massive loads of data to the cloud will not be a feasible option. Despite 5G networks, the infrastructure will be inadequate to handle the data rates and volumes with a real-time acceptable quality of service. (in spite of 5G networks). Even if only a subset of the data collected at the edge needs to be shared with the cloud, it will have tremendous implications on system design. One of the most critical elements with the deployment of such systems will be to ensure security, trust, and privacy of data.

It is not inconceivable therefore to think of edge devices as nodes of a blockchain, each node attached to its own distributed storage, communicating with other nodes to create a trusted ecosystem and enhancing the overall security. The key to this realization will be interoperability and building an ecosystem that can work as seamlessly as cloud applications work today. And in this world, I am not sure if SaaS-based business models will continue to dominate. A move towards transactional models seems more appropriate. Today’s payment systems are also woefully inadequate to process transactions when a trillion devices need to be managed and coordinated together, in real-time and across geographical borders. I suspect that we will see a big move where payments can be handled with digital and virtual assets rather than actual fiat money changing hands.

The ‘20s will be an exciting time to build new ecosystems that are ushering in some of the biggest transformations in our lifetimes. It’s all happening right now and I can’t wait to see what we will build over the next decade.

Happy ‘20s.


Now some significant news from the world this week:

  1. North America | The most crypto and blockchain investment in 2019: The Block Genesis published an overview of industry investment activity for the 2019 period this week, finding that a staggering majority of it occurred in Asia, North America and Europe. [… Read More on The Block]

    All told, North America, Europe, and Asia accounted for approximately 99% of the investment deals in 2019. And despite the narrative of blockchain technology “banking the unbanked,” regions that need improvements to its financial infrastructure the most, such as South America and Africa, represented less than 1% of investment deals.

  2. Israel | A pioneer with 32% more blockchain companies in 2019: 2019 was not a great year for many in the blockchain space. Yet, despite widespread employee downsizing and some projects falling by the wayside, blockchain in Israel is thriving. The number of companies in the crypto and blockchain fields grew by 32% in 2019. While blockchain is steadily growing in this land, it remains a mere drop in the ocean compared to the tech industry at large. A recent report by PwC on the health of the tech sector in Israel found that the number of unicorns (private ventures with a valuation of more than $1bn) rose from 11 to 20 in 2019, with the value of exits doubling from the previous year. [… Read More on Yahoo! Finance]

  3. China | Guangdong Blockchain Financing Platform Aims to Help Small Business: The government-led project is supported by OneConnect, a fintech firm backed by one of the largest Chinese insurers, Ping An Insurance, according to a media report from Sina Finance. One of the platform's users is Ant Financial which announced in November plans to test its blockchain network, Ant Blockchain Open Alliance, to support startups, while OneConnect filed a $468 million initial public offering in the U.S. in the same month. The new platform creates credit ratings for small and medium businesses based on their financial and administrative information via a blockchain network of 26 government agencies such as the State Administration for Industry and Commerce. [… Read More on Coindesk]

  4. Payments | How Blockchain Can Improve Globalization: One of the most important things in the global economy is the movement of goods and services. Currencies are used to facilitate these movements, but issues such as high inflation rates and currency manipulation techniques are making a lot of people worried about the validity of traditional currencies. Immutability could make cryptocurrencies the right tool to facilitate the movement of goods and services. Even though some government officials argue that the speed and network congestion of cryptocurrencies are hindering them from being adopted as a tool for globalization, many projects have started to disprove these assumptions. This is making cryptocurrency a globalization tool that people can trust. [… Read More on CoinTelegraph]

  5. M & A | Trusted IoT Alliance merges with Industrial Internet Consortium: Last Friday, The Industrial Internet Consortium (IIC) announced it is joining forces with the Trusted IoT Alliance (TIoTA) to combine memberships and drive industry collaboration. Members of the two organizations will now work under the IIC to research, develop and promote practices relating to internet of things (IoT) systems including blockchain. Founded in 2014, US-based IIC fosters the use of Industrial Internet of Things (IIoT), while TIoTA has been working on integrating distributed ledger technologies (DLT) and IoT. TIoTA started three years after the IIC and boasts members such as the IOTA Foundation, Chronicled, ConsenSys, Bosch, Siemens, Cisco and KPMG. [… Read More on Ledger Insights]

The Final Word | Court Denies SEC Request to Make Telegram Reveal ICO Bank Records

Court Denies SEC Request to Make Telegram Reveal ICO Bank Records

The District Court for the Southern District of New York has denied a request by the United States’ securities regulator to make Telegram reveal its bank records. According to a Jan. 6 court order signed by Judge P. Kevin Caste, the court has denied an application by the U.S. Securities and Exchange Commission (SEC) to “compel the production of the defendant’s bank records.” Despite the court deciding in favor of Telegram, the company will still have to prove that its bank records comply with foreign data privacy laws. The court’s decision came on the same day that Telegram released a series of summaries about its Telegram Open Network (TON) and corresponding Gram tokens. The company also emphasized that Gram is not an investment product, once again implying that the token is not a security and is outside of the SEC’s jurisdiction. [… Read More on CoinTelegraph]


About Proteum
Proteum is a global blockchain investment and advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their ecosystem and unique capabilities so that they can own and control their future. ProteumX, our accelerator program, invests in and accelerates the time to market for startups and emerging ideas based on blockchain solutions.

www.proteum.io | info@proteum.io  | Twitter: @proteumio | ProteumX

On Payments, Healthcare & Nike's CryptoShoes

Off the Blocks | Vol 96, December 17, 2019

At Proteum, we partner with entrepreneurs to develop and deploy innovative products and solutions built with blockchain technology - advising them on building sustainable companies in a rapidly changing investment, regulatory and tech landscape.

Give a gift subscription


Coming Back to Life

I have been traveling for a little more than a month, primarily in Europe and India, to check the pulse on blockchain adoption and gain a fresher perspective as the technology rolls out globally. All said, it feels good to be back home in Silicon Valley, which I believe will continue to be a dominant player in the ecosystem. To avoid recency bias, I have held off putting together my thoughts until now.

Image: A mural outside El Pimpi, in Historic Malaga

2019 has been a phenomenal year for the growth and adoption of both crypto and blockchain projects worldwide. An added bonus was the disappearance of “blockchain tourists”. Across the globe at conferences, there has been a noticeable thinning of the crowds. The dabblers are long gone and in the wake, there remain some very serious players who are not only ushering in business models that tackle problems that have long plagued various industries - whether in healthcare, information systems, and financial markets, but also creating novel solutions for media, sports, and entertainment, etc. that would not have been possible without blockchain technology. Ironically, many of the problems in traditional industries have been created by the roll-out of technology that did not have the foresight to align incentives in a globally connected, decentralized world order.

This is beginning to change now. Twitter recently announced that it is funding a team to develop an open and decentralized standard for social media.

2.5 quintillion bytes of data is created everyday. Centralized platforms simply cannot enforce content recommendation and moderation at a global scale - the early experiments have utterly failed as platforms refuse to give up their proprietary, walled garden approach to data and users. A one-dimensional approach has long masqueraded as “global, AI platforms” that are highly unlikely to be aware of local regulations, compliance requirements or even cultural, behavioral and trust patterns.

So, it was refreshing to be talking about these issues at Convergence - The Global Blockchain Congress in Malaga in early November 2019. An important question raised in the Congress was about leadership when it comes to standardizing blockchain technology. How does one think about creating a coordinated approach, given that startups and individuals can have an outsized influence on the development of technology itself? The below Twitter thread captures the essence of my thoughts on the subject. (click to read the entire thread)

While talking about standardization, most people tend to confuse it with regulations. While the two are interconnected the difference lies in compliance. Standards are not mandatory, but regulations necessitate compliant behavior. The state of development within the blockchain ecosystem at present requires regulators not to import standards into their agendas and let the technology flourish. For example, there are enough regulations within the financial services industry to deter money laundering. Impeding blockchain applications by adding an extra layer of compliance may not be the best way to encourage innovation.

Within the EU, it is great to see the rise of organizations such as the International Association for Trusted Blockchain Applications (INATBA) that are encouraging a dialog between developers and regulators. As discussed above, a centralized regulatory approach is bound to falter and it is imperative to develop sector-specific guidelines and specifications for the development and acceleration of trusted blockchain applications. I would watch this space closely.

Share Off the Blocks | Proteum Weekly Newsletter


Now some significant news from the world this week:

  1. Payments | China’s Blockchain Network Taps WeBank For Technical Infrastructure: Tencent’s WeBank, which is a digital bank in China that provides loans to individuals and small businesses, will be the technical infrastructure provider for China’s national blockchain network. The blockchain network is called the Blockchain-Based Service Network (BSN), and it uses open consortium chain FISCO BCOS. The network is not comprised of a single blockchain, but rather the consortium is a set of blockchain applications meant to aid the public. The BSN is made up of 14 members, and it was launched last week. It will work on developing and operating the blockchain-based applications that will reside in the network, with each member contributing knowledge in their respective fields. Consortium members include Huobi China, the State Information Center, WeBank, China UnionPay, China Mobile, and China Telecom. [… Read More on PYMNTS]

  2. Payments | JPMorgan Blockchain Payments Network Eyes January Japan Launch: The U.S. banking multinational is eyeing a launch for its Interbank Information Network (IIN) in the East Asian nation possibly in January. Built on Quorum, a permissioned blockchain based on Ethereum and developed by JPMorgan, IIN is designed to enable member banks to exchange information in real-time, allowing them to verify payment has been approved. This, the bank says, helps reduce friction in international payments and ultimately leads to faster processing times. The system is also a way of reducing the risk of money laundering, which is why over 80 Japanese banks have expressed an interest in joining IIN, Sanai said. Japan has been under pressure to up its anti-money laundering game since the Financial Action Task Force found "numerous and serious deficiencies" in 2014. [… Read More on Coindesk]

  3. Healthcare | Anthem Will Use Blockchain To Secure Medical Data For Its 40 Million Members: Anthem, the second-largest health insurance company in the U.S, has started to use blockchain technology to help patients securely access and share their medical data. The company plans to roll out the feature, which is in pilot testing now, to groups of members in the next few months. All 40 million members will have access to it in the next two to three years, according to company officials.   

    What blockchain potentially gives us the opportunity to do is not worry about those trust issues. We have an opportunity now to share data that people can make their own decisions on.

    - Anthem CEO Gail Boudreaux

    [… Read More on Forbes]

  4. IoT | 75% of IoT Firms Want to Add Blockchain: While there are still few large-scale use cases of blockchain, the Internet of Things (IoT) industry turns out to be “a sweet spot” for the adoption of such technologies. 

    “75 [percent] of IoT technology adopters in the U.S. have already adopted blockchain or are planning to adopt it by the end of 2020 out of more than 500 U.S. companies.”

    - Avivah Litan, IT industry analyst at Gartner

    Blockchain technologies can create a trusted environment for data transmissions between virtual networks or devices while increasing the efficiency of such exchanges, according to the survey.  According to Litan,  of the 75 percent of blockchain adopters, 86 percent are implementing both IoT and blockchain in various projects. IoT companies aim to integrate computing devices with digital and mechanical machines to avoid human-to-human or human-to-computer interaction. For example, Apple Watch and Amazon Alexa are using these technologies in consumer goods. The technologies can also be used in the healthcare, industrial and military sectors. [… Read More on Coindesk] 

  5. Gaming | AMD Joins Blockchain Game Alliance, Partners With Marketplace Creators: Advanced Micro Devices (AMD) has joined the Blockchain Game Alliance and forged two new partnerships to help advance the technology’s use in the industry. A Dec. 12 press release revealed that the chip manufacturing giant is partnering with blockchain technology providers Robot Cache and ULTRA — both of whom are working to develop and operate blockchain-based online gaming marketplaces. These marketplaces aim to establish new, secure purchase options and distribution channels for game publishers and users. The Blockchain Game Alliance (BGA) is an organization committed to the adoption of blockchain technologies in gaming by promoting the creation of common standards, facilitating networking and knowledge-sharing and encouraging cooperation and the implementation of best practices. [… Read More on CoinTelegraph]

The Final Word | Nike Wins Patents to Tokenize Limited-Edition “Breedable” Shoes

Nike
Image Source

American footwear and apparel powerhouse Nike appears primed to be the latest major oncomer to the arena of tokenization — that is if a patent the company has just received from the U.S. Patent and Trademark Office (USPTO) is any indication. The patent first filed back in the spring and awarded by the USPTO on December 10th, is for a token system that would be built around Ethereum’s ERC721 token standard, which allows a smart contract to represent a non-fungible asset via a tradeable token on Ethereum. These tokens, known more specifically as non-fungible tokens (NFT), are programmed to be irreversibly scarce and thus non-duplicatable, making them ideal for digital collectibles, gaming assets, and the like. In the case of Nike’s patent, the outlined system would entail linking pairs of limited-edition CryptoKicks footwear, a line the company has envisioned to launch the aforementioned token meld, to unique owner IDs and virtual collectible NFTs representing digital versions of physical shoes. [… Read More on Blockonomi]


About Proteum
Proteum is a global blockchain investment and advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their ecosystem and unique capabilities so that they can own and control their future. ProteumX, our accelerator program, invests in and accelerates the time to market for startups and emerging ideas based on blockchain solutions.

www.proteum.io | info@proteum.io  | Twitter: @proteumio | ProteumX

Chinese Digital Migration and Resold Lamborghinis on A Blockchain

Off the Blocks | Vol 95, November 26, 2019

At Proteum, we partner with entrepreneurs to develop and deploy innovative products and solutions built with blockchain technology - advising them on building sustainable companies in a rapidly changing investment, regulatory and tech landscape.

Share Off the Blocks | Proteum Weekly Newsletter


Recently, the Chinese premier, Xi Jinping, President of the People’s Republic of China and General Secretary of the Communist Party of China, said that the country needs to “seize the opportunity” afforded by blockchain technology. He added that China “… [must] clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation.” This has, of course, led to a wide range of speculation on what it means for the world and the trajectory of both public and private blockchains.

The below commentary first appeared on CNBC and provides a good primer for context and the trajectory of the digital currencies and provides a perspective from the East.

The Good, The Bad And The Ugly Of A Chinese State-backed Digital Currency

As investors and technologists worry that the U.S. is falling behind in the race for dominance in blockchain, Beijing is trying to get ahead.

In a bear market for crypto we make friends; in a bull market we make money.

- Rae Deng, founding partner of Du Capital, a crypto investment firm

Deng said at CNBC’s East Tech West conference in the Nansha district of Guangzhou, China she sees another flourishing crypto scene coming, with more Chinese investment striding to the market after Beijing suddenly announced plans to embrace blockchain technology.

China is eyeing for a thorough digital migration. The policy signal will definitely bring a lot of incremental capital into the market.

She argued that Beijing’s public support will drive “traditional money” – corporate investment in Chinese traditional sectors — to become a big player. These investors previously shied away from the crypto market due to its sensitive status. Initial coin offerings (ICO) have been banned in China since 2017.

The magnitude and appetite of the traditional money will definitely change the status quo of the crypto community. That’s a total game changer.

China’s Blockchain Opportunity

In late October, the global crypto market surged after Chinese President Xi Jinping said the country should “seize the opportunity” blockchain technology presents.

The price of bitcoin briefly soared above $10,000 following Xi’s remarks. That pop was mirrored by similar spikes in the prices of more than a hundred Chinese stocks with blockchain exposure as well as a bunch of other cryptocurrencies.

While Beijing’s unexpected move came after Facebook announced its Libra cryptocurrency project in June, the policy change did not happen overnight, according Edith Yeung, managing partner at Proof of Capital, a blockchain-focused venture capital fund.

They have been working on and studying this for the last 5 years so this is not just ‘because of Libra therefore we do this’.

- Edith Yeung, Proof of Capital

China is moving full speed ahead while Facebook defends the cryptocurrency project against skeptical regulators. The social media giant has also seen many key payment partners, including Mastercard, Stripe, Visa, PayPal, and eBay, pull out of the project.

Industry experts predict that China could start rolling out its state-backed digital currency as early as the next two to three months. Government grants have been set up to help blockchain projects. For example, Guangzhou’s city government launched a 1 billion yuan (about $140 million) subsidy fund to support the development of the blockchain industry.

What’s The Rush?

China’s crypto initiatives are strategically significant. Blockchain is the technology field that China started to develop almost at the same time as other countries in the world. It’s hard for China to claim technological supremacy on fields like Internet Plus [China’s initiative on information technology] or artificial intelligence, but the blockchain technology would be a perfect fit for China’s technological dominance. It’s called ‘corner overtaking’ strategy in Chinese. Xiao told CNBC in Mandarin, indicating that the practice could be risky yet effective.

- Xiao Wunan, executive vice-chairman of the China-backed Asia Pacific Exchange and Co-operation Foundation (APECF).

To be sure, China’s digital currency might be very different from bitcoin or other tokens, which emphasize anonymity and decentralization. A state-issued digital currency would help the Chinese government fight issues like counterfeiting and product safety, but it also raises privacy concerns.

Internationalization Of The Yuan

First, a state-backed digital coin could “further facilitate the internationalization of yuan,” Du Capital’s Deng said. “It could run in parallel with the SWIFT [Society for Worldwide Interbank Financial Telecommunications] system and also the One Belt One Road initiative could be a carrier of that,” said Deng. A digital currency would also be able to tap into China’s massive, and largely cashless, payments system.

WeChat Pay has one billion transactions a day and footprints in 60 countries,” “China has the digital payment infrastructure of that scale and also domestically as China is moving towards a cashless society. It only makes sense for the central bank to adapt to that digital revolution reality.

- Rae Deng

China is the world’s largest e-commerce market, accounting for more than 50% of global transactions, according to a July report from the U.S. Department of Commerce’s International Trade Administration. In 2018, third-party mobile payment transaction volume hit 190.5 trillion yuan, according to China-based analytics firm iResearch. That figure amounts to about $28.78 trillion, based on the 2018 average exchange rate from the U.S. Internal Revenue Service.

Safer Food And Fewer Counterfeits

A state-backed digital currency could give regulators greater abilities to track money flows and product logistics within that massive e-commerce market. That would better equip them to tackle issues like counterfeit goods and product safety concerns, APECF’s Xiao explained.

The prime application would be in the agriculture sector because food security is one of the most crucial issues in China. Regulators would be able to track and identify origins of products. Also, if we apply the blockchain technology to Chinese e-commerce site, it would be much easier to address fake goods issues.

- Xiao Wunan

His comments come as China grapples with skyrocketing pork prices as African swine fever kills millions of hogs. “Similarly, it would be important to the healthcare sector too, as China may soon allow entry of Indian generic medicines in the country,” he added. “Traceability is the best cure for fake medicine.”

Enterprise Market

Experts also see the potential for a state-backed digital currency in China’s business-to-business (B2B) market. Currently, the country’s payment leaders – WeChat Pay and Alipay – focus on person-to-person or small payments, with little B2B exposure.

That B2B e-commerce market totaled 20.5 trillion yuan ($3.07 trillion) in 2017, according to statistics site China Internet Watch.

Blockchains have a huge potential to reduce cycle time in business transactions. Adding B2B payment into the blockchain transaction in a strong global currency would have a big impact in accelerating B2B [activities]. You could have the first Chinese B2B payment infrastructure that could be very, very large.

- Paul Brody, head of blockchain at Ernst & Young

Concerns About Fraud And A Cryptobubble

But as cash floods into the latest crypto boom, concerns about fast-rising valuations and potential fraud also crop up.

“I hope we will avoid repeating some of the mistakes here in China that happened in the rest of the world,” said Brody.

Cryptocurrencies hit staggering highs toward the end of 2017 and the beginning of 2018, only to plunge to a fraction of those levels. Bitcoin has recently been seen trading around $8,000, far below its all-time high of nearly $20,000 in late 2017.

“Seventy-five percent of the companies in the [previous] ICO boom never produced any product. Most of them never got auditors and that’s why we got a lot of the fraud,” he told CNBC.

Valuations of Chinese crypto start-ups and projects are surging, making it harder for potential investors to negotiate.

“Some of the companies we spoke to immediately raised their valuations by more than 50% shortly after Xi’s speech,” Du Capital’s Deng said. “It has become harder for us to get deals at reasonable valuations because competition is heated.”

“I think there will be bubbles for sure,” she added.


Now some significant news from the world this week:

  1. Travel | German Airline Hahn Air Issues First Blockchain-based Tickets: German airline Hahn Air, which offers scheduled and charter flights within Europe, announced on Monday it has issued the first airline tickets enabled by blockchain technology, in partnership with Winding Tree, an open-source travel distribution platform. Hahn Air on Monday flew passengers holding blockchain-powered tickets on its scheduled flight from Dusseldorf to Luxembourg. Hahn Air is able to list inventory, manage the reservation requests, and receive payments once the booking process is complete. As a mode of payment, the airline accepts cash, credit card, or cryptocurrency, either the lif token or ether. [… Read More on Reuters]

  2. India | Binance Enters Indian Market With Acquisition of Crypto Exchange WazirX: Binance, the top crypto exchange by trading volume, announced the news but did not provide details of the deal. The company's entry into India might at first glance seem surprising, with the local crypto industry having been greatly disrupted by a ban on banking services for crypto firms instigated by the nation's central bank in April 2018. Since then a number of local exchanges, including Koinex and Zebpay, have been forced to close, with the remainder moving to survive on crypto-to-crypto trading, and avoiding the fiat system. That's a strategy employed by WazirX, which launched earlier this year offering crypto-to-crypto and peer-to-peer trades. Binance, however, has a way around the banking issue, having launched Indian rupees on its Binance Fiat Gateway in recent weeks. Now it says users of WazirX will soon be able to buy the tether (USDT) stablecoin with rupees via WazirX and use USDT to trade any cryptocurrency offered by Binance. [… Read More on Coindesk]

  3. Storage | Blockchain-based Storage Service Takes on Amazon AWS: Storj Labs, which operates a beta storage service for developers, businesses and consumers, initially launched the Tardigrade Decentralized Cloud Storage Service in August. Today, it announced its Beta 2 release and pricing, taking aim at Amazon's AWS S3 cloud service with what it says is a more cost-effective and resilient approach. The Tardigrade storage service claims 99.97% availability and said its prices are less than half the starting prices of legacy cloud storage providers. Tardigrade breaks up a file into 30 pieces that are stored across 80 drives from a pool of 3,000 distributed throughout any of 183 different countries or territories. Storj's Tardigrade service is fault-tolerant because the hard drives are located throughout the world and data is stored in a way similar to a RAID configuration in a traditional storage server – redundancy is built into the scheme. […Read More on ComputerWorld]

  4. Enterprise | Enterprise Blockchain Adoption Hinges On Use Case Fit: As technology matures and hurdles toward adoption clear, industry watchers are expecting blockchain to spend at least another three years stuck in the experimentation phase. Cultural shifts aside, the success of blockchain application in the enterprise depends on alignment between the context of the problem at hand, the capabilities of the specific technology and the deployment of the resources would require. Failing to balance these three elements means a mismatch between the technology and the problem it's suited to solve, a disconnect that can lead to further sunken costs and friction during adoption. Considering blockchain as the potential solution to a problem should rely on a combination of the company's business requirements, appetite for risk and approach to innovation. [… Read More on CIO Dive]

  5. Business | Waves and the Tricky Task of Being a Russian Crypto Brand: When Vostok, the enterprise branch of Waves, a blockchain startup, launched last year, it was proud to showcase its Russian connections. It debuted with the news of a partnership with Rostec, a state-owned mega-corporation with ties to many hi-tech industries. But the Russian links have been a double-edged sword. While the Rostec tie-up earns legitimacy at home, it complicates things abroad. Rostec was sanctioned by the U.S. in 2014 following Russia’s annexation of Crimea and the war in Ukraine. Registered in Switzerland, Waves is striving to become a key blockchain provider for the Russian state. Based in Moscow, in a large office in the middle of a hipster office cluster, Waves is walking a fine line between being friendly with Russia’s state-controlled corporations (many of which are sanctioned by the U.S. and Europe) and building a positive image for the global market. […Read More on Coindesk]

The Final Word | Lamborghini Uses Blockchain to Authenticate Resold Cars

Image Credit

“When Lambo?” became a rallying cry for would-be cryptocurrency millionaires during the last Bitcoin bull run; now the Italian supercar manufacturer has itself embraced blockchain, using the technology to authenticate heritage vehicles.  Lamborghini announced it is using Salesforce Blockchain to secure and authenticate heritage Lamborghini cars. Resold Lamborghinis, writes the car manufacturer, go through 800 to 1000 certification checks at its headquarters in Sant'Agata Bolognese, Italy.  To create a history of the car, and to verify the authenticity of the parts and services, resold Lamborghinis must pass through a network of photographers, auction houses, dealerships, repair shops, newspapers, magazines, and other media sources—a process the manufacturer describes as “grueling.” Using Salesforce Blockchain, Lamborghini can create a trusted network of parties including technicians, repair shops, and dealerships. From the network, cars will have immutable records of service, restoration, and prior service. […Read More on Decrypt]


About Proteum
Proteum is a global blockchain investment and advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their ecosystem and unique capabilities so that they can own and control their future. ProteumX, our accelerator program, invests in and accelerates the time to market for startups and emerging ideas based on blockchain solutions.

www.proteum.io | info@proteum.io  | Twitter: @proteumio | ProteumX

Investing in Michael Jordan & Arts On The Blockchain

Off the Blocks | Vol 94, November 19, 2019

At Proteum, we partner with entrepreneurs to develop and deploy innovative products and solutions built with blockchain technology - advising them on building sustainable companies in a rapidly changing investment, regulatory and tech landscape.


Sports, Entertainment and Blockchain

Traveling through Europe the past week, it has become increasingly clear that digital technologies are permeating through the physical world at an increasingly higher rate. Nowhere is this more apparent than the world of sports where franchises are trying every play in the book to attract and retain fans across all sports, soccer, basketball, motorsports, tennis, etc. In this world of glamor and glitz, startups are starting to play a role in creating new fan experiences both on and off the field. One such company is Globatalent that is enabling franchises to find revenue opportunities outside of the sporting event itself. In Barcelona, I caught up with my friend, Sunil Bhardwaj, CEO, Globatalent for a fascinating conversation on how he sees the opportunity with sports, entertainment, and blockchain evolving in the next few years. Below is a guest post by Sunil and an introduction to his London based company.


Can you imagine a time when you could have invested in Michael Jordan before his debut in the NBA? 

Now I would be a billionaire, but what does it mean to invest in a future pro athlete? It means a lot of things, firstly that you can help a human to achieve their dreams. It means you can promote a society with values as sports promotes teammates, effort, selflessness, sacrifice, and consistency. Finally, it provides access to anyone to invest in an industry that right now they are not able to be a part of and since Globatalent appeared, this asset class was only available for private equity, venture capitalists and highly connected sports management companies.

Investing in athletes means that you can own a percentage of their future incomes during certain times of their career plus the benefits just explained before. Awesome, right?

The biggest sports management agencies in the world are handsomely paid for managing the careers of athletes. The 43 firms ranked by Forbes, have collectively negotiated an astonishing $51.7 billion in current professional athlete contracts, netting them $2.7 billion in maximum possible commissions, an increase of more than 45% from just five years ago. The top agency made $414M in fee commissions representing players in different sports.

On the other hand, an NCAA player is not allowed to get paid while universities are making millions on sponsoring and TV rights. The players themselves get a miserable grant that allows them to study. So, rather than staying for 4 years at the university, how can we not expect these players (who are willing to spend one or two years at the university) to turn pro and move as quickly as possible to play in the NBA, NFL, etc as they can make millions of dollars right away.

In Europe, young athletes don’t even think of going to the university if they are playing soccer in youth teams of top soccer clubs. They want to make all the effort to become professional and some at the age of sixteen are making more money than their parents do.

Most of these guys are under the control of managers agencies and some of them are very professional but others …. it is a different story and one that is at the heart of the genesis of Globatalent.

In the 21st century and in the era of digital collaboration Globatalent has come to change most of the old ways of this traditional industry of sport.

How?

By being able to help athletes and clubs to monetize their assets and therefore fans will be able to buy those assets and own a percentage of future income from them. However, we have added an extraordinary change as well by allowing fans to trade the assets from the athletes in our peer to peer exchange, adding liquidity to this process.

Therefore coming back the example of Michael Jordan I could buy assets from Michael Jordan that represent 1% of his income for the next 10 years and wait for my yearly payment or by selling my Michael Jordan asset in the Globatalent exchange. I can diversify my holding s by investing in another asset by another athlete. Note that these are all uncorrelated investment opportunities.

So being a global company, Globatalent provides a unique opportunity to involve fans from all over the globe to be part of this $3 Trillion business industry.

Find out more about Globatalent on their website and follow Sunil on Twitter @Sunilbhardwajca


Now some significant news from the world this week:

  1. Tokens | What the Ethereum "Transaction Flippening" Means: A “flippening” of sorts has happened on the Ethereum blockchain. Data revealed in a Coin Metrics report this week notes that, for the first time, the number of ERC-20 transactions has surpassed the number of transactions done in ETH itself. And as popular as those tokens are, they could be on the verge of giving way to the newer class of non-fungible tokens. The surge in transactions involving these types of smart-contract based tokens could be evidence that the Ethereum network itself is at last finding its footing with users, as evidenced by a variety of actual use cases.  [… Read More on Decrypt]

  2. EU | Exploring DLT and Blockchain for Alternative Finance – A Collection of Case Studies: The European Crowdfunding Network today published a first report on the use of DLT and blockchain for alternative finance during the global blockchain conference Convergence in Malaga. To understand the ways in which blockchain can most effectively be used for alternative finance the report clustered the results into the following use cases:

    • Online payment and identity services

    • Peer-to-peer investing and investment services

    • Financial democratization

    Read The Report Here

  3. Investing | Family Offices Finally Accept the Benefits of Investing in Bitcoin: Although Bitcoin’s volatility is well-documented, this has not stopped investors from adopting cryptocurrencies as a way of effecting a diversified investment strategy. Interestingly, the volatility narrative is somewhat losing its potency as Bitcoin slowly establishes stability. VanEck published a study that highlighted some of the factors that aided Bitcoin’s ascendancy as a viable investment product. One of these factors is the digital asset’s correlation to major market indices. In the study, VanEck noted that Bitcoin’s apparent disparity from established and emerging markets makes it a suitable portfolio diversification option. […Read More on CoinTelegraph]

  4. Banking | US Crypto Firms Will Soon Have Another Banking Option: Things may be about to get a little easier for firms working with cryptocurrency in the U.S. U.K.-based Cashaa, which describes itself as a banking service platform, is about to launch bank accounts for stateside crypto firms denominated in U.S. dollars. The new accounts will be open for applications from Nov. 25, with Cashaa saying they offer full banking features with access to all nations globally, bar sanctioned jurisdictions. Crypto industry companies in the U.S., as well as other jurisdictions, have traditionally struggled to find banks that will serve them. Even if they do, accounts may be closed without notice or warning over the perceived risks of cryptocurrencies. As such, there are relatively few crypto-friendly banks allowing firms to conduct normal daily business as other more traditional industries would expect as standard. [… Read More on CoinDesk]

  5. France | Parisian Blockchain Incubator The Garage Opens: The Garage, a Parisian blockchain incubator started by Starchain Capital’s Cyril Paglino, Dune Network’s Fabrice Le Fessant, and The Family’s Oussama Ammar, opened doors recently. It requests five percent equity—or five percent of capital—and in return promises to “do everything to make you succeed”, and offers “access to the best blockchain ecosystem in Europe.” The Garage promises to help its community with a variety of tasks, including product, engineering, press relations and marketing and gives entrepreneurs up to 60% equity in companies that it’s developed in-house. [… Read More on Decrypt]

The Final Word | Can Blockchain Help Inspire Artistic Creation?

The Malta AI & Blockchain Summit. Photos: Chris Sant Fournier
The Malta AI & Blockchain Summit. Photos: Chris Sant Fournier

The recent Malta AI & Blockchain Summit presented a number of topics involving the protection of personal data, the swift creation of transactions on a secure decentralised system as well as the capacity to revolutionise the way art is created.

‘Blockchain and the Arts’ was a segment that welcomed experts from across the globe and invited them to speak about their areas of expertise within the blockchain niche, linking it to the arts in the form of music, painting, graphic design and other areas of expression.

Young people create a lot, blockchain and timestamping within the blockchain can simplify the process.

Maria Carola, CMO, Guarda Wallet

[… Read More on The Times of Malta]


About Proteum
Proteum is a global blockchain investment and advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their ecosystem and unique capabilities so that they can own and control their future. ProteumX, our accelerator program, invests in and accelerates the time to market for startups and emerging ideas based on blockchain solutions.

www.proteum.io | info@proteum.io  | Twitter: @proteumio | ProteumX

Loading more posts…